During the early hours of the Asian morning today, NZD/CAD finally broke its short-term upwards-moving trendline taken from the low of October 29th. The pair drifted lower, but found support near the 200 EMA on the 4-hour chart. The rate could slide a bit more to the downside to test one of its key support levels, but given that NZD/CAD looks slightly oversold on the shorter timeframes, there is a chance for a small correction up, before another leg of selling. We will take a bearish approach, at least for now.
As mentioned above, a small decline may lead to a test of the 0.8615 hurdle, which is the low of December 18th. Initially, if that support area is able to withstand the bear pressure, this could lead to a small recovery, where the rate my rise back to the 0.8685 barrier, marked by yesterday’s low. If the bulls find it difficult to bypass that barrier, this may result in another round of selling. If NZD/CAD manages to break the 0.8615 hurdle this time, this could open the horizon of some lower areas, like the 0.8583 obstacle, or the 0.8555 level, marked near the highs of November 26th and 29th.
Our oscillators, the RSI and the MACD, are still leaning more to the downside. Despite the RSI pointing slightly upwards, it still remains below 50 and closer to the 20 mark. The MACD is more reassuring in term of the downside, as it continues to point lower, while sitting below zero and its trigger line.
Alternatively, if the rate gets a strong boost, which helps it break the 0.8713 barrier, marked near an intraday swing low of December 23rd and near an intraday swing high of January 2nd, this could attract more buyers into the game. We will then examine a possible test of the 0.8758 obstacle, which if broken could clear the way to the 0.8800 level, marked by the highest point of December.
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